Wall Street Moves Higher as Tyson Joins Bidding for Hillshire

By THE ASSOCIATED PRESS

May 29, 2014

Stocks rose modestly on Thursday, pushing the Standard & Poor’s 500-stock index to another nominal high. Investors seemed to rally behind a bidding war in the food industry as well as a somewhat positive report on the labor market.

Among the biggest gainers was the deli meat and hot-dog maker Hillshire Brands, whose shares rose $7.94, or 17.7 percent, to $52.76. Only two days after Pilgrim’s Pride made a $6.4 billion offer to buy the company, the chicken company Tyson Foods stepped in to offer $6.8 billion.

Investors expect that Tyson’s offer will start a bidding war. Hillshire’s closing price was already above Tyson’s offer of $50 a share. The stock is up 43 percent this week alone. Tyson also rose on the news. The stock gained $2.50, or 6.13 percent, to $43.25, making the company the biggest gainer in the S.& P. 500.

The stock market has moved little this year, but one theme that continues to play out is the large number of corporate deals. In addition to the battle over Hillshire, Apple said it would buy Beats Electronics for $3 billion.

“It’s an encouraging sign because companies see the economy improving,” said Joseph Tanious, a global markets strategist with J.P. Morgan Asset Management. “Last thing you want to do as a large company is use your cash to buy a company when you have an uncertain outlook on the economy.”

Other food companies also rose after the Hillshire Brands news as traders anticipated more deals and possibly more bidding wars. The jam and jelly maker J.M. Smucker increased $2.38, or 2.37 percent, to $103. Hormel Foods, the maker of Spam, rose $1, or 2 percent, to $48.71.

Investors also had a round of mixed economic data to interpret Thursday. The Labor Department said the number of Americans applying for unemployment benefits dropped last week to 300,000. The less-volatile four-week average fell to 311,500, the lowest since August 2007.

Bond prices pulled back slightly, pushing the 10-year Treasury note to a yield of 2.47 percent, from 2.45 percent on Wednesday. The price fell 7/32, to 100 9/32.

Yields have been trading at lows not seen in a year, as foreign buyers have jumped into Treasurys. Most investors believe this recent downward movement in bond yields is temporary. The Federal Reserve, the biggest buyer of Treasurys for the last few years, is slowly exiting the market and the economy is improving.

The stock market continues to hit highs, but volume remains light after the Memorial Day holiday. Traders expect business to be slow until next week, when investors get the May jobs report and the European Central Bank will announce its latest interest rate decision.

“We may be moving higher, but the market is really in wait-and-see mode,” said Ryan Larson, head of equity trading at RBC Global Asset Management.